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Then, Nectar evaluated every manager individually, including a face-to-face meeting. Despite the fintech's flirt with machine learning and AI, most investor still go with their gut feeling, according to Appenzeller. This left 15 hedge funds standing – which are being subjected to ongoing, automated checks.

Fintech License

While algorithms and artificial intelligence screen the portfolios, other programs make adjustments. In doing so, Nectar hopes to lower costs while improving performance – the holy grail in asset and wealth management. The Swiss fintech wants to compete with stellar returns achieved by major U.S. university endowments, for example.

To be sure, Appenzeller and Co still have to deliver on that promise, but the firm has carved out a new business area for itself. Would Nectar, which has until now targeted financial intermediaries, not clients directly, sell the portfolio optimizer to wealthy clients? The firm doesn't rule it out.

Nectar has already prepared the ground by clinching a license with a self-regulating organization. The firm sees this regulation as sufficient, but is watching Swiss regulator Finma's debate over a lighter-touch fintech banking license.